EuroBusiness Media (EBM): Société Générale, one of the largest European financial services groups, publishes its second quarter results today. Frédéric Oudéa, welcome. You are the CEO of Société Générale. The results you’re publishing today are very positive. What are the engines of this growth?
Frédéric Oudéa: These results are indeed, as you say, very strong and they reflect I think the quality of the business model of the franchises. First of all, we have a very strong growth of the revenues, a very strong organic growth, and from all the businesses. And that reflects the strong commercial dynamic of our businesses. We are also getting the benefit of all the efforts in terms of cost monitoring, and as expected, the cost of risk is also going down. So all in all, we have effectively a net profit with a profitability of 10.3% for the quarter. And it’s on the back also of our very strong balance sheet we’ve further enhanced our core capital ratios, so I must say all the lights are green.
EBM: Your results show that all your businesses are growing. Can you tell us a bit more?
Frédéric Oudéa: Yes, this is really the great satisfaction. If we look at the three different businesses: first of all, the French retail is doing very well, in an economy which is improving progressively. We conquered new clients, in particular new mass affluent clients so it feeds more deposits; we see also an improvement of the loan generation both for households and also progressively for companies; and we have also the benefit of all our new initiatives, for example the new business model for the private banking which is doing very well, as well as insurance.
Regarding our international retail banking business and financial services - if I put aside Russia with its specific situation, where the situation is normalising - beyond Russia, all the activities are also growing very well, in particular for example in Europe, in Africa, where again good deposit growth, good strong growth of loans also and, of course, financial services, the fleet management, the insurance business are performing very well. So all in all, very good results.
And finally GBIS - the Global Banking & Investor Solutions - very good performances in particular on the capital markets in the equity businesses with a spectacular increase, also on the financing and advisory and with the private banking. So across the board I must say, and that’s very very good, that shows the quality of the business model, everywhere it grows.
EBM: You set out a Strategic Plan through to 2016. We’re halfway there: can you tell us where you stand with respect to those goals?
Frédéric Oudéa: When we really effectively compare - if again I put aside Russia for the specific reasons that we all know, the economic situation is worse than expected because of the crisis -, but beyond Russia everywhere we are in line or above our objectives with a good dynamic of revenues, cost under control and a cost of risk which is better than our expectations. So we are for the first half of this year very close to our target of 10%. I am confident that the quality of this business model will deliver this profitable growth that we ambition.
EBM: So given that you’re close to achieving those goals, why do you feel the need to cut back on your spending? And where do you think those cuts are going to come from?
Frédéric Oudéa: I think that banking is not dissimilar from any industry. And on top of that, banking is now also facing the need to adapt to the new technologies, to the changes in client behaviours. And our duty is precisely to adapt our business model, to provide even better services at a cheaper cost to our clients. So like in any industry, we need to optimise our efficiency, improve when we can save money in order to invest in new systems, new digital applications and also, of course, to carry the burden of the new regulatory framework. So we are completing successfully this year a first wave of initiatives, we are launching a new wave for the next three years - 2015 to 2017 - with the ambition to cut costs by something like 850 million euros. And again, to a certain extent today the first and primary challenge for banks is to integrate the digital technology, to adapt the processes, to adapt the business model; it’ our number one priority. I think we start from a solid foundation, we have a capacity to innovate, but we need to further accelerate of course to adapt to our client needs.
EBM: Frédéric Oudéa, CEO of Société Générale, thank you very much.
Frédéric Oudéa: You’re welcome.
